Category Archives: Florida

Wild Times in Southern Florida at Waterbridge Condominiums

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Egads, it’s just an average meeting of an average Condo Board. Some poor average shmuck who’s been insisting that the board repair the fire damage over his apartment gets taken to the cleaners. All the resident did was ask to see the Condo Association’s financial records…it seems there are no reserve funds to pay for the fire damage. The board president repeatedly tries to scratch this guy’s eyes out. Another former board president admits to a local TV crew that he’s harrassed and even pulled a gun on this same resident.

LOL! What a wonderful day it was when the video camera was invented!

(link to Local10 News story)

 

Story Behind Florida’s Epidemic of Hostile Condo Takeovers

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guest blog by Deborah Goonan

In a previous blog, I explained CAI’s conflicted stance on private property rights of condo owners. In this blog, I provide the back-story.

Prior to 2007, if owners wanted to terminate the condominium regime, Florida law stated that 100% of owners – and lien holders – had to agree to the termination and a specific plan for liquidation of all assets. (Governing documents could specify a lower threshold, but few did.) The main problem with unanimous consent was that, following some of Florida’s hurricanes which damaged a significant number of condo buildings beyond repair, it was difficult or nearly impossible to locate and obtain consent from every unit owner, thus delaying termination and redevelopment.

In 2006, the Florida Legislature passed a remedy to this problem by amending Statute 718: allow dissolution of condominium with 80% member vote of approval OR less than 20% disapproval, in the aftermath of a disaster that destroys a building beyond repair, as well as in the event of optional or voluntary termination. Governor Jeb Bush vetoed that bill, citing concerns about less than unanimous approval, and the likelihood of unintended consequences in the event of optional terminations.

In a letter from the former Governor dated Jun 7, 2006, Jeb Bush (R) states:

“Among the potential unintended consequences is that the bill would permit one owner (such as a developer) to purchase 80 percent of the units in a condominium and seek termination, with the ultimate goal of redevelopment, in the absence of economic waste or impossibility. A possible remedy to this situation would be to require one vote per person, regardless of the number of units owned.”

The following year, in 2007, the Legislature was presented with a slightly modified version of the bill, written with the assistance of West Palm Beach attorney and CAI member, Michael Gelfand. Senator Steven A. Geller (D) presented the Senate version of the bill. Public records indicate that Geller was selected as CAI FL’s Legislator of the year in 2002. The former Senator is now a shareholder at Greenspoon Marder Law, a firm that specializes in Land Use, Zoning, Lobbying and Gaming. Representative Elaine Schwartz (D) presented the House version. Schwartz’s husband, Marty is a prominent real estate attorney and partner in the law firm of Bilzin Sumberg Baena Price and Axelrod, LLP.  The 2007 version allowed for optional termination by 80% vote of approval, as long as less than 10% objected to termination. The bill also diluted rights of lien holders to approve the termination plan, based upon appraisals presented by the majority voting for termination.

Despite continued objections from parties who continued to be opposed to optional termination by less than unanimous consent, the bill was not modified to remove the possibility of optional termination under these terms. Nor did the Legislature allow for allocation of votes per person rather than per unit. The bill passed the Legislature with near unanimous approval (just one vote against), and with the “strong support of the Real Property Section of the Florida Bar.”

Prior to the bill being signed into law by then-Governor Charlie Crist (at the time, a Republican), Sarasota attorney Dan Lobeck, also a CAI member attorney, expressed concerns in a May 2007 article in the Herald-Tribune,  stating that the Voluntary (optional) Termination portion of the approved bill:

“…is simply a property grab by developers with assistance of the state.”

In the same report, Jack McCabe, CEO of McCabe Research & Consulting LLC, stated:

“If this [bill] goes through, we are going to see developers go in and be much more successful in acquiring existing condominium properties, especially on the waterfront,” and “some of those properties that are now more affordable will be leveled and very expensive multimillion-dollar units will be built on those sites. It will effectively render it impossible to find affordable condominium units in waterfront locations in Florida in the future.”

Of course, Developers and investors began to take advantage of the new Statute almost immediately.

It’s not as though the CAI and Real Estate industry proponents of this flawed statute provision, and the Legislature that overwhelmingly voted in favor of the bill, could not have foreseen such “unintended consequences.” The curious observation is that CAI’s member attorney firms are clearly divided on the issue of consent for Optional Termination of condominiums in Florida – and have been from the start -representing developers and investor-controlled Associations on one side, and individual owners on the other.

References:

http://www.becker-poliakoff.com/Files/7525_cu_2007_archive.pdf

http://www.ccfj.net/PB06SB1556veto.pdf

http://www.heraldtribune.com/article/20070511/BUSINESS/705110303

http://www.becker-poliakoff.com/Files/8934_cu_2014_v06.pdf

Where Does CAI Stand On Florida Condo Terminations?

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guest blog by Deborah Goonan

Unless you’ve been hiding under a rock for the past decade, you have probably heard about Florida’s boom and bust real estate market for condominiums. The big news right now is the fact that hundreds of condo owners are being forced to sell their homes at a loss to developers and investors, in a series of so-called voluntary condo terminations.

In a recently published article in the Wall Street Journal,  Jack McCabe, CEO of McCabe Research & Consulting LLC, was quoted as saying close to 400 uncompleted complexes remain as part condo and part rental in the state of Florida.

A Bloomberg Businessweek report published last month estimates that 235 condominiums have been terminated statewide since 2007.

West Palm Beach attorney and CAI member, Michael Gelfand, was also quoted in the WSJ article,“It is a classic case of unintended consequences” of the 2007 amendment, which, according to the article, he helped to draft.

Hundreds, perhaps thousands of condo owners have been caught in the middle of a battle to keep their homes or at least receive just compensation. Owners from 13 condo complexes have joined together to fight against developers, and have created their own Facebook page: Floridians ACT.

Attorney Michael Mayer, of Peyton Bolin PL, which operates five offices in Florida, has taken up the fight for owners of Via Lugano condominium in Boynton Beach. According to Mayer, the legal suit contends that the 2007 statute amendment allowing for optional termination by less than unanimous consent does not apply to condominiums created prior to its enactment. The suit also challenges the takeover on Constitutional grounds, at both state and federal levels, as a violation of owners’ rights to “acquire, possess, and protect property.” The Peyton Bolin law firm is listed among CAI’s member service providers.

Ironically, in the midst of terminations of unsuccessful condo projects, a south Florida real estate blog reports that lenders have eased financing for development of 260 new condo towers (over 35,000 units) in South Florida alone, most of them close to the water and on the high end of the market.

So what is CAI’s official Public Policy on the matter?

Look no further than page 58 of CAI Government & Public Affairs Public Policies:

“Community Associations Institute (CAI) supports protections that enable property owners to challenge governmental taking of common or private property. CAI opposes legislative or judicial actions that would limit or restrict the ability and rights of community associations to maintain control over association common property.”

Read between the lines: Developers and private investors who take control of the Association must not have their property rights restricted. Furthermore, it would be inappropriate to protect owners’ rights where the party seeking to take property rights is not the government.  CAI maintains, generally supported by the courts, that Community Associations are corporate entities, and are not government entities.

Whose interests does CAI actually represent? The introduction to Public Policies provides some contradictory language:

“CAI is dedicated to fostering vibrant, responsive, competent community associations that promote harmony, community and responsible leadership. CAI advances excellence though a variety of education programs, professional designations, research, networking and referral opportunities, publications, and advocacy before legislative bodies, regulatory bodies, and the courts.

In addition to individual homeowners, CAI’s multidisciplinary membership encompasses community association managers and management firms, attorneys, accountants, engineers, builders/developers, and other providers of professional products and services for homeowners and their associations. CAI represents this extensive constituency on a range of issues including taxation, insurance, private property rights, telecommunications, fair housing, and community association manager credentialing. CAI’s over 32,000 members participate actively in the public policy process through more than 60 local, regional and state chapters and 35 state Legislative Action Committees and one federal Legislative Action Committee.”

Are Community Association Boards that are controlled by developers and investors exercising “responsible leadership” in these hostile corporate takeovers that deprive Americans of their property rights? Does Florida Statute 718 represent the “individual homeowners” constituency of CAI, through optional termination provisions drafted by one of their own member attorneys? It seems the statute as written supports the collective interests of the Association rather than the individual interests of owners.

Is it realistically possible to provide “advocacy” that will encompass a “multidisciplinary membership” where the interests of one subset of a constituency are often in direct conflict with the interests of another?  You be the judge.

References:

http://investing.businessweek.com/research/markets/news/article.asp?docKey=600-201408291903KRTRIB__BUSNEWS_31950_37969-1

http://www.caionline.org/info/provider/Pages/CAINationalServiceDirectory.aspx

http://www.caionline.org/govt/news/Political%20HeadsUp%20Public%20Document%20Library/CAIPublicPoliciesJan2013.pdf

https://www.facebook.com/Floridiansact

http://www.peytonbolin.com/recent-press/

http://online.wsj.com/articles/in-florida-condo-battles-play-out-1407260650

http://therealdeal.com/miami/blog/2014/08/29/condo-construction-financing-spigot-begins-to-open-in-south-florida/

 

Not Just HOAs! ALL Of You!

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guest blog by Deborah Goonan

There may be a tendency on the Neighbors At War website to concentrate on warning people in Homeowners Associations. But that may be too narrow a scope.

Don’t limit our audience to HOA owners. Include tenants, who make up more than 30% of HOA residents in many communities. Include home and condo buyers, particularly those who are looking for a home and true quality of life.

Savvy real estate investors who really want the HOA model and know how to work the system: We can leave them out of the equation.

But an important audience of people who SHOULD be paying attention to the big picture are the owners of non-HOA properties. You see, all taxpayers are eventually going to foot the bill for the next approaching crisis in housing, as aging, failing HOAs with insufficient funds to maintain the infrastructure turn to traditional government to solve their problems. When HOAs cannot be maintained, blight and crime increase. Property tax bases decrease along with property values.

Evan McKenzie has explained this well in Beyond Privatopia. Local governments will have to pick up at least some responsibility – and cost – of repairing crumbling roads, correcting poor drainage that leads to flooding, increased police protection for crime-infested areas, increased strain on the courts related to crime and HOA-related lawsuits, etc.

I will give you a real life example. My former HOA in Florida had a developer-owned water & sewer utility which was recently sold to the local municipality and County under an inter-local agreement.

According to the pre-purchase County-funded Engineer evaluation, the water/sewer system was in shambles, the sewer system out of compliance with FDEP since 2010, the water system with a history of sporadic water quality violations and boil water advisories. Two out of four wells were unusable, and two wells were barely enough to meet demand. The entire system needs to be rebuilt – potable and sewer treatment system, lift stations, wells, etc. The system lacks redundancy – meaning there is NO back up if a major component fails. So redundancy must be built in to bring the system up to current code. This will cost in excess of $11 million. There are about 1500 homes and a handful of commercial customers (who threaten to connect to a different utility provider). After the purchase last fall, owners received a 47% rate hike. More increases will follow. So far, it has only been HOA owners affected.

But the local news recently reported that the city who purchased the utility is “broke” and they blame the high cost of acquiring the water utility from the HOA! They are reporting there will be tax increases for City residents! So you see, the people in this municipality are going to have to pay for the former HOA developer’s deferred maintenance of a water/sewer system that is not even used by non-HOA residents.

I recently read that Fairfax County VA is seriously considering taking over maintenance of “larger” storm water ponds in HOAs. Why? Because the HOAs cannot afford to maintain them, and downstream flooding is resulting due to lack of maintenance. Who will pay for this? Fairfax County homeowners, even if they do not live in an HOA.

So, should the Neighbors at War message be aimed only at those who own homes in Homeowners Associations? My answer would be “NO!” It’s a problem for all American homeowners. You will eventually be taxed for the misdeeds of the out-of-control Homeowners Association Industry.

Stupid, Stupid Florida

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You’ve heard about the new law in Florida, haven’t you? The one that now gives “emergency powers” to all Homeowners Associations, condo associations and property owners associations?

Yep, all HOA boards will now have “emergency powers” to raise dues, make contracts and borrow money without even all board members being present, without even allowing homeowners to have a say.

All I can really do is shake my head in disgust and ask my readers to consider five of the most significant dates in world history:

January 30, 1933.

February 27th, 1933.

February 28th, 1933.

March, 5, 1933.

March 23, 1933.

Every school kid should have those dates locked in their hearts and committed to memory for life. I seriously doubt if a kid….or a parent, anywhere, has any idea of the significance:

January 30th, Adolph Hitler becomes Chancellor of Germany.

February 27th, an arsonist sets fire to the Reichstag Building.

February 28th, blaming “an emergency” thousands of people, including all legislators not friendly to the Nazi cause, are arrested and imprisoned.

March 5th, new elections put the Nazi party in control of Germany.

March 23rd, the Enabling Act takes effect, which essentially makes Adolph Hitler the absolute dictator over Germany.

Jan Bergemann, one of the biggest homeowners rights advocates in the nation, is one of the few Americans who knows all about those five dates. After all he was originally from Germany and he knows what happens when dictators are given unrestrained power. He now lives in Florida where he’s been the state’s top crusader against abuses and crimes committed by the boards of rogue Homeowners Associations.

Bergemman says the new Florida “emergency powers” law is dangerous.

That could well be the understatement of the year.

(link to Orlando Sentinel story)